carbon tax applied?

25May08

FT Weekend Columnist Tim Hartford writes this weekend about the implications of carbon tax, and as much as prospects do look good, it is difficult to accurately predict the real consequences of such a tax.

David Popp, an economist at Syracuse University, used patent data to evaluate the response to the energy crisis of the 1970s. He found some cause for optimism: as oil prices rose and rose, more and more energy-saving patents were applied for (and eventually approved) in every field from heat exchangers to solar panels. The process wasn’t automatic, and patent applications seemed to peter out before oil prices reached a maximum – perhaps all the obvious ideas had been applied for. But Popp’s analysis suggests that high prices do inspire an innovative reaction.